Underwriting Tip (Individual & Family California)

I wanted to address an issue with regard to underwriting for individual and family health insurance plans in California. A little tip to help you determine what plan rates to target and whether or not you would be considered for coverage.

Ignoring for a moment any health conditions that are ongoing (these are dealt with separately), we need to talk about your Rx and how it affects underwriting.

Here is a simple formula for you:

Take you monthly retail brand Rx costs and multiply them by four.

This is the minimum premium amount that you would need to target before a carrier would even consider underwriting your case.

So, let's say you have the following brand drug costs per month (you can go to drugstore dot com and get average retail pricing):

1 brand drug at $131.00
1 brand drug at $97.00
Total brand = $227.00
Minimum target premium = $908.00 (4x brand drug cost)

That means that the approximate minimum premium rate that a carrier might consider to underwrite would be over $900 per month. If you choose a $120 per month plan, since the maximum rate increase on PPO plans (there is no rate up on California HMO plans) is 2x standard premium, you would be declined for coverage right off of the application since the max rate for that plan would be $240.00 at the top rate-up.

If you can't find any PPO plan in the carrier's options that costs at least 1/2 of $908 ($454), then there is no point in even applying for coverage.

Remember this is a tip regarding Rx usage. And be aware that carriers check through services like Intelliscripts to verify every fill you've had for any Rx over the last few years. If there are further health conditions beyond the Rx, even if you can find a plan that meets this basic rule, you might (and probably will) still be declined for coverage.

Underwriting and Declines (Individual & Family)

I wanted to talk a bit about something that has come up quite a bit recently concerning declined coverage and health insurance underwriting in California.

I always maintian that, with the exception of MRMIP enrollments which require a decline, generating a decline unnecessarily is never a good idea. Many people have called me in the last few months who have been advised by another agent to submit an application for health insurance even though the health history appears to be problematic. This is never a good idea and is, truthfully, not necessary to determine within a reasonable degree the outcome of the underwriting.

We, as agents, are able to call into the carrier's underwriting departments and, anonymously request and underwriting "review" for any prospective applicant. In most cases, given a reasonably accurate history, that underwriter can tell us whether or not the application would be declined for coverage. Also, agents have an underwriting guideline for each carrier they represent and often the answer can be found there without the need to even call an underwriter. No need to expose you to a decline that will be on your record for 10 years.

Now, some will say "yes, but each carrier does its own underwriting without regard to another carrier's decision" and this is absolutely true. However, if a person is declined for coverage, for the next 5-10 years, depending on the question in an application, that person MUST indicate that he/she was declined for coverage. This will be an instant red flag to the new underwriter who will likely take a very thorough approach to the applicant. This question will appear on both individual and employer-sponsored group applications. It's a stigma that should be avoided whenever possible. Kind of like a ding on your credit rating.

Let your agent do the work up front, look at all of your options, and make your decision based on the most accurate probability, not just flinging an application into underwriting and hoping for the best.

Welcome!

I would like to welcome you to my California Health Insurance weblog. Unlike other insurance blogs, which are sales-oriented, the intention of this blog is to provide the reader with pertinent and important information about health plans, benefit provisions, peculiarities, underwriting, and many other topics not frequently disclosed to the public.

If you visit my web site (www.davefluker.com), you will find that I am a non-traditionalist as an independent agent. I work primarily with individuals, families, seniors and very small businesses (mostly spousal) who have difficulty in obtaining quality health insurance and may be unaware of programs available or protections under the California law.

I hope that you will find this weblog and my web site of value and I welcome feedback and comments.

Dave